Wider adoption of standards is the key to both supply chain efficiency and meeting new consumer needs, said a report released today by Capgemini Consulting, the global strategy and transformation consulting arm of the Capgemini Group, together with GS1, the global standards organization, and The Consumer Goods Forum.
The report, titled: “The Future of Standards in the Consumer Goods & Retail Industry: Cut costs and meet new consumer needs,” calls on the industry to introduce simplified programs to help users embrace and deploy standards while enabling provision of standardized product data to consumers.
The latest study was based on in-depth interviews with leaders in supply chain and IT functions of 20 global consumer goods manufacturers and retailers worldwide, across Europe, Asia and North America, including Johnson & Johnson, Nestlé, Tesco, Unilever and Walmart.
Since the first barcode was scanned in 1974 standards have enabled more efficient flows of goods and information. The research suggested that consumers today, empowered through social and mobile technologies, increasingly require real-time product updates and the ability to scan barcodes to obtain “beyond the label” data such as product origin, ingredients and manufacturing working conditions.
The results of the study showed that there are numerous challenges regarding standards faced by the retail industry including:
Underuse of standards – Compared to large companies, small and medium enterprises have significantly lower rates of standards use, with manual processing frequently the norm. Standards need to be extended to new channels such as e-commerce and affiliated transportation and logistics parties.
Data available through product barcodes is often missing or inaccurate and not provided in a standardized way across multiple channels.
Promotions are problematic as they are necessary for sales growth but difficult to forecast demand as retailers are often unwilling to share promotional strategies.
With the challenge of Big Data, retailers and manufacturers find it difficult to respect standards that require barcode numbers to change every time a product is slightly altered.
There is increasing scarcity of natural resources but also rising consumer interest in sustainable business - creating the demand for more accurate and consistent information on carbon footprint, water usage, recycling and energy consumption.
Key recommendations of the report are to develop marketing programs targeted toward companies not making full use of standards, to introduce simplified standards programs for ease of adoption, to use existing standards to communicate product information to consumers, to collect sufficient information about product origin and route to market to minimize risk, and to develop solutions to ensure data quality.
“Our report shows the urgent need for not only the greater adoption of standards and more consistency in standards implementation, but also improved data, guidelines and governance across the consumer goods and retail sector. This is particularly important due to increasing consumer demands, which are driving the digital transformation needed to improve the shopper all-channel experience,” said Susan Wood, Principal, Capgemini Consulting North America.